Showdown 3: Benefits

This is part three of a series exploring factors in self-employment and traditional employment. For more about this series, read the opening article.

Benefits

What kind of non-financial compensation you receive

Self

Boss

Pros

Cons

Pros

Cons

You can set up excellent benefits such as matching retirement plans or fully-funded health coverage

Tons of vacation time if you’re willing to take it

Health insurance coverage is tax deductible

Benefit plans are extremely expensive because you don’t have a large group discount

You may find it difficult or impossible to take vacation time at all

Providing benefits to employees is very expensive

Large group discounts make benefits cheaper to provide and buy into

You may have the option to get a company car, travel and training stipends, etc.

Sometimes benefits are taxable – which is a hidden cost

You rarely have influence over the benefits packages or plans

Conclusions

As we’ve discussed before, startup mode usually means low budget. An excellent 401k package may be in your future, but most small businesses simply can’t offer the kind of competitive packages that larger companies can. It isn’t impossible, but it’s something where financially stable companies have an advantage. More recently, co-op plans and HSAs have opened the door for small companies to provide some of these benefits.